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California targeting real estate kickbacks

Proposed rules could drive some title insurers out of business

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California regulators plan to tighten rules governing affiliated businesses and step up enforcement of anti-kickback provisions in existing law -- changes they estimate could cost the state's title insurers and underwritten title companies up to $732 million a year in profits. The California Department of Insurance says the proposed new regulations, which are the subject of two public hearings this week, will increase competition in the state's title insurance industry. Some critics of the industry say that because consumers don't shop around for title insurance, title insurance companies focus their marketing efforts on real estate brokers, agents and lenders who can steer business their way. One way to do that is to form joint ventures, also known as affiliated or controlled businesses, in which title insurers and real estate brokers and lenders share profits from the sale of settlement services. A federal law, the Real Estate Settlement Procedures Act, allows compani...